‘Improve productivity to spur farm growth’

WHILE agricultural growth can be achieved by the expansion of agricultural area and input intensification, growth through the improvement in productivity is a promising option, according to a discussion paper released by a senior research fellow of the government think tank Philippine Institute of Development Studies (PIDS)

Roehlano Briones of PIDS noted that productivity is a relatively low priority for policy and that agricultural strategy is oriented toward domestic protection to achieve self-sufficiency to support production by generous subsidies.

Using a new supply-and-demand model dubbed as the Agricultural Multi-Market Model for Policy Evaluation (Ample), Briones noted that rapid productivity growth, even when combined with trade liberalization, is generally favorable for farmers and consumers based on improved outlook for production, exports and food consumption.

“In contrast, trade liberalization alone has a contractionary effect on agriculture, and production support is a costly instrument for promoting agricultural growth,” the paper read.

Briones said the model experiments suggest a “back to basics” strategy for agriculture, incorporating various productivity-based instruments such as investments in research and development, extension, rural infrastructure, protection of the resource base of agriculture, and even human capital formation and institutional reforms.

The paper noted that pursuing productivity growth holds a lot of promise for making food more accessible to people.

Citing a World Bank study, the paper noted that in Asia, productivity has been steady at about 1 percent to 2 percent per year since the 1960s. Investments in science, roads, human capital and adoption of better policies and institutions made these productivity gains possible.

“From 1980 to 2004, world agriculture has been doing well, with agricultural gross domestic product growing faster than that of global population,” the paper read.

“Much of [it] was driven by productivity growth; hence, for instance, the real prices of grain in world markets fell by 1.8 percent per annum over the same period,” it stressed.

Briones characterized productivity growth as “slow magic.”

“As its effects are slow, it is easily overlooked, particularly when the policy environment welcomes quick fixes and tangible results which subsidy-based policies can readily deliver,” he said. –Jennifer A. Ng / Reporter, Businessmirrro